Let them Load & Connect
What a Fascinating year it has been.
I recently had a chat with one of Australia’s most influential real estate players – the CEO of REA (Real Estate Australia Group), Owen Wilson.
The last twelve months have been incredibly challenging.
Owen says, “The market was severely impacted as a result of the restrictive lending environment following the Financial Services Royal Commission in 2019. We saw a huge drop in listings, particularly in Melbourne and Sydney in the first quarter. And then at the back end of the year, obviously we’ve had the impact of COVID-19.”
However, Australians obsession with property remains.
Owen says, “In July this year, we broke through 12 million Australians visiting our site, which is over 60 per cent of Australia’s adult population, it is quite incredible. There was a huge increase in buyer enquiry as well in July – it was up about thirty-eight per cent which was fantastic.”
Australians are adopting new ways to consume property.
Owen says, “We’ve had over 14 million digital inspections since restrictions came in place in March. We’ve had about the same number of 3D tours as well. This is going to be a tool consumers will continue to want in their property journey. If you want to qualify genuinely interested buyers, this is the way to do it. It doesn’t mean they won’t physically inspect a property, but what it will mean is they physically inspect fewer properties. It’ll save them a lot of time, and that’s what consumers want.”
Different markets are experiencing different conditions.
“If you speak to people in Perth, for example,” says Owen, “it’s business, as usual, same in Adelaide, Queensland and even Sydney – the property market there is still quite buoyant. Then you see what’s happening in Melbourne with stage four restrictions. I think this will create a lot of pent up demand. And if we do get on top of this virus and the restrictions come off when they say they will, I think we’re in for a perfect couple of months of spring.”
For people who have still got jobs, they have a lot of spare cash.
Owen says, “Savings rates are at four and five-year highs at the moment because people can’t go to restaurants, and they can’t go on holidays, for example. So they’ve got the money they can spend in other areas. I think home improvement is one area that is going to benefit from this in the next six months.”
The impact of the current Victorian lockdown
Owen thinks the lockdown will, unfortunately, have a substantial negative impact. It’s hard to get photography done and the floor plans arranged and so on. He says, “We’re already seeing a substantial drop in listings in Melbourne during stage four lockdown, but we are also very hopeful that it will follow the experience we had with the last restrictions. We saw a big drop in listings across the country in April and May, and then a really healthy rebound in June and July. I expect we’ll see the same thing in Victoria – a substantial drop in listings for the period of the lockdown and then a powerful bounce once we can get back inside properties.”
How REA Group has responded
Owen says, “We are pleased with how we’ve responded to the COVID-19 situation. We’ve had to adopt a fairly disciplined approach to cost management. We brought our costs down nine per cent for the financial year and twenty-one per cent in the fourth quarter. We went to virtual working very quickly to prioritise the health of our staff, but we’re most proud of how we’ve delivered new products and features to the market, both to support our customers and also their vendors. We think we’ve helped keep the market moving while these restrictions are in place. We are also pretty proud of the financial support that we’re providing to our customers through this time.”
New products coming down the line
Owen says, “We’ve been testing a CMA product with some customers. The feedback has been incredibly positive. We’re differentiating our CMA because it’s going to have our demand data in it. And we’ve got, without doubt, the best view of demand data in the country. For agents to be able to use that demand data when pitching for new vendors will be quite valuable.”
REA Group is also going to bring a new offering to the market this quarter targeting private landlords. Owen says, “This offering is designed to get the listings that are out there that haven’t been on our site so that we can give prospective tenants the most comprehensive view of the rental market. We’re number one in rent for audience with about 18.9 million visits each month to the rent section of realestate.com.au.
“We found that about 24% of the self-managed landlords are considering using a property manager in the next 12 months. So we see a fantastic opportunity to get those private landlords in front of our customers to convert them back to being supported by a property manager.”
Owen adds, “When a private landlord comes onto the site, we will allow them to connect with a property manager, rather than advertise. Property managers will be able to create profiles for their Agency on our site, which means a private landlord can then go and look through the Agencies in their area. And hopefully, select one of those to take on the management of their property. The message we’ll be trying to communicate to private landlords is that it’s not just about finding a tenant. The ongoing services that property managers provide deliver great value.”
REA Group is clear about its focus areas. Owen says, “The way we look at it is that property management is a very people-intensive business. It’s not a digital business. Our whole strategy is about making property managers more efficient through the use of technology and taking away the pain points for tenants as they connect with those property managers. So property management is for our customers, not for us, that’s for sure. The bulk of customers are supportive and actually looking forward to getting some leads.”